The Philippine Stock Market since the day I am aware of it


Secrets of Millionaire Investors_page272_image4

It was 6 years ago that  I began to investing in the Philippine Stock Market. As far as I can remember the PSE index was around 3,700 way back in February 2011 and eventually went to as high at 4,500 on August 2011. It was the time that the Philippine economy was one of the best performer in the world in which continued until today at an average 7% growth rate.

The Philippines maybe troublesome for the last 6 years due to some conflicts in Mindanao, the West Philippine Sea, foreign relations especially with the USA and some internal conflicts in the government. But despite all of that, the Philippine economy was doing great and I can attest to that since I myself have experience a 120% interest gain on my stock market investments for the last 6 years.

I am one of the grateful investors in the Philippine stock market until today in which the index is already almost 8,000 even with the on-going conflict in Marawi City in which a Martial Law was implemented by the President. Indeed the economy today compared to six years ago is doing great as World Bank itself consider the Philippines as one of the fast growing economy in the world. Although in 2015 the stock market has mellowed down because of the upcoming election period. the stock market hits its lowest from 8,500 to as low as 6,000 from 2015 to 2016. Basically the stock market is controlled by emotions and I have already experienced that since the day I am aware and started investing on it.

So for those who are new to this type of investment just be consistent and keep investing even though the rewards will take you more years to be harvested. Consider it a marathon and not a sprint.

 

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Extra pocket money for Halloween


For the past months the stock market have been so bloody, many (if not all) of our favorite stocks have fallen down.

Some of us investors or traders may feel so very fearful and get depressed due to the heavy losses they were experiencing.

But for those who are for the long term (like me), we are very happy because of the turn of events.

This is the time when we love to buy additional shares from our favorite companies.

But do you know that “part time trading” can make a profit instantly?

The answer will is definitely a Yes!, you can make a profit within the day or within a week from pat time trading, and this is how I did to earn an extra pocket money for the Halloween.

Below are my stocks picks that that I traded that gave me additional pocket money for the Halloween:

halow

Stock Code: PCOR (Petron Corporation)

Buy Price: Php 7.37

Interest generated in 3 days: 9%-12%

halow 1

Stock Code: MEG (Megaworld)

Buy Price: Php 4.41

Interest generated in 4 days: 9%-11%

halow 2

How to pick stocks and gain extra pocket within a week?

  1. Proper trading plan
  2. Study chart patterns
  3. Look for entry area or buy area
  4. Have a target exit area or sell area
  5. Stick with your plan and be contented with your earnings

P.S. Can you relate to my trading strategies? I would appreciate if you will have your comments on this article.

The best is yet to come, keep invested anyway


We are now in the last quarter of the year 2015, and by looking back to the previous 3 quarters that we had this year it is somewhat like the toughest ride on the waves that we have experience in the stock market. Some of us might have been in a situation of fear that they think that they might be losing all their hard earn income. Some may have been so anxious on the downward movement of the market.

Looking back of the last 3 quarters here are the factors that caused the world markets to move on a downtrend:

The Greek Financial Crisis

After the Greek election of January 2015, the Eurogroup granted a further four-month technical extension of its bailout programme to Greece; accepting the payment terms attached to its last tranche to be renegotiated with the new Greek government before the end of April 2015, so that the review and last financial transfer could be completed before the end of June. The new renegotiation deal was still pending at the end of May.

Faced by the threat of sovereign default, final attempts to reach a renegotiated bailout agreement were made by the Greek government in the first half and second half of June 2015. Default would inevitably entail enforcement of recessionary capital controls to avoid a collapse of the banking sector – and potentially could lead to exit from the eurozone, due to growing liquidity constraints making continued payment of public pension and salaries impossible in euro.

According to a statement by the Eurogroup, the Greek government unilaterally broke off negotiations late on June 26, diverting from their prior agreement to continue negotiating until a mutually acceptable compromise could be presented to the Eurogroup in the afternoon of 27 June. A few hours later, Alexis Tsipras announced on Greek national television that instead, a referendum would be held on July 5, 2015 to approve or reject the achieved preliminary negotiation result (the latest counter proposal submitted and offered by the Troika on 25 June) for a new set of updated terms ensuring completion of the second bailout agreement.

The Eurogroup clarified on June 27, that the only imaginable scenario in which the Eurogroup perhaps could offer Greece further flexibility through a new technical extension of its bailout program to pave the way for holding the proposed Greek bailout referendum on July 5, would be if the Greek government prior of 30 June settled a final renegotiated deal on a set of mutually agreed updated terms for program completion – subject to the final approval by its proposed bailout referendum on July 5. The reason for this firm stance was that the Eurogroup wanted the Greek government to take some ownership for the subsequent program’s completion at the new, updated terms, assuming that the referendum was held and resulted in approval.

As for the Greek authorities’ continued call in negotiations to be granted additional debt relief, the Eurogroup had signaled willingness to uphold their “November 2012 debt relief promise” after reaching agreement for updated terms for completion of the second program. This promise is a guarantee which holds that if Greece completes its second program and if Greece’s debt-to-GDP ratio subsequently gets forecast to be over 124% in 2020 or 110% in 2022 for any reason, then the Eurozone will implement a debt-relief large enough to ensure that these two targets will still be met.

On June 28, 2015, the referendum was approved by the Greek parliament, and ECB decided to maintain availability of its Emergency Liquidity Assistance to Greek banks at its current level, as it was still considered politically possible for Greece to ensure extension of its pre-required current bailout program (at least until 30 June). As many Greeks continued rapidly withdrawing cash from ATMs due to fear that capital controls would soon be invoked, the Greek central bank convened a meeting on Sunday evening, June 28, in order to decide how to handle the liquidity crisis during the upcoming week.

On July 5, 2015, a large majority of Greek citizens voted to reject the bailout terms (a 61% to 39% decision with 62.5% voter turnout). This caused indexes worldwide to tumble, as many are now uncertain about Greece’s future, fearing a potential exit from the European Union. Following the vote, Greece’s finance minister Yanis Varoufakis stepped down on July 6 and was replaced by Euclid Tsakalotos. Negotiations between Greece and other Eurozone members continued in the following days to try to procure funds from the European Central Bank in order to decide whether Greece should or should not remain a member of the Eurozone area. On July 13, after 17 hours of negotiations, Eurozone leaders reached a provisional agreement on a third bailout programme to save Greece from bankruptcy. But a final deal needs further negotiations, and requires ratification in several national parliaments. Source: wikipedia

The Chinese Yuan Devaluation

China’s president Xi Jinping has pledged the government’s commitment to reforming China’s economy in a more market-oriented direction ever since he first took office over two years ago. That and the fact that China is determined to be included in the IMF’s special drawing rights (SDR) basket of reserve currencies makes the POBC’s claim that the devaluation was the result of measures taken to allow the market to have a more instrumental role in determining the yuan’s value more believable. One professor at Cornell University indicated that the move should help China’s case for SDR reserve currency status and claimed that it was also consistent with China’s “slow but steady” market-oriented reforms.

The IMF re-evaluates the currency composition of its SDR basket every five years, the last time being in 2010. At that time the yuan was rejected on the basis that it was not “freely usable,” but the devaluation, supported by the claim that it was done in the name of market-oriented reforms is being welcomed by the IMF as it gets set to consider the yuan’s inclusion. But despite this welcomed response, the IMF has stressed that China will still have to do more and be willing to progress towards a “freely floating exchange rate.”

Many are skeptical of China’s commitment, arguing that the new exchange-rate policy really hasn’t changed and is still akin to a “managed float;” the devaluation is just another intervention and the yuan’s value will continue to be closely monitored and managed by the PBOC. The skeptics believe that the move was further evidence of China’s continued exchange-rate manipulation in order to boost its sputtering exports. Source: investopedia

The delayed Fed Rate Hike by the U.S

CHICAGO/ORLANDO, Fla. (Reuters) – Two Federal Reserve policymakers whose views are often at odds both suggested on Monday they could well support an interest rate hike in December, as long as the economic data does not disappoint and that rate hikes once begun are gradual.

While two does not make a crowd, their apparent agreement on the plausibility of a December rate increase came just a day after Fed Vice Chair Stanley Fischer said he too expects a 2015 hike.

Indeed a large majority of Fed officials believe it will be appropriate to raise rates this year, but after the Fed opted to keep rates near zero at their meeting last month, investors have been increasingly doubtful. Weaker-than-expected data on job creation since the Fed’s most recent meeting has fuelled their skepticism, along with few signs that the global economy is poised to pick up.

Traders see about a 40 percent chance the Fed will hike in December, and give about even odds for the January meeting. For October they see a less than one in 10 chance, though both Dennis Lockhart, the centrist chief of the Atlanta Fed, and Chicago Fed president Charles Evans, whose views are more dovish, sought to keep even October in the market’s sights.

“I think October is a live meeting, clearly there is the potential that the data coming in, in advance of the October meeting will be sufficient … we have a lot more in December,” Lockhart said in Orlando, Florida.

 Speaking separately in Chicago, Evans said that while for him waiting until mid-2016 to raise rates would be the “best choice,” doing so earlier would not necessarily adversely affect his forecast for the economy.

“There is wiggle room” on the timing of the rate hike, he told reporters after a speech, and the economy could probably even withstand a slightly steeper set of rate increases than he, personally, would view as optimal.

It is “way too early,” he said, to know whether a December rate hike, or even an October one, would be appropriate.

The Fed next meets Oct. 27-28. Source: yahoo finance

The rest of 2015 will still be favorable for a bargain hunting since of the latest update on the Fed rate hike which was again schedule in the late December.

P.S. Share your own thoughts about this article through writing in the comment below.

Entry strategy for Swing traders


Your swing trading entry strategy is the most important part of the trade. This is the one time when all of your trading capital is at risk. Once the stock goes in your favor you can then relax, manage your stops, and await a graceful exit.

This page explains the basic price pattern that is used to enter stocks and becoming familiar with it, you can try out more advanced strategies based on the specific pattern that you are trading.

With your entry strategy, the first thing that you want be able to do is identify swing points. What’s a swing point you ask? This is a pattern that consists of three candles.

Identifying reversals using swing points

For a swing point low:

  1. The first candle makes a low.
  2. The second candle makes a lower low.
  3. The third candle makes a higher low.

This third candle tells us that the sellers have gotten weak and the stock will likely reverse.

For our entry strategy, we are trying to find stocks that have pulled back and made a swing point low.

Let’s look at some example:

swing point

See how the pattern consists of a low (1), lower low (2), then a higher low (3)? This is a classic swing point low. Our entry strategy would be to enter this stock on the day of the third candle.

It is worth noting that swing points will result in a powerful reversal. However, a reversal will not happen without a swing point developing. Take the time to go though a few stock charts and look at the reversals that happened in the past so that you are able to quickly identify this crucial price pattern.

Consecutive price patterns

Ideally, we want to trade stocks that have consecutive down days prior to the swing point low developing. This is the best case scenario. Here is an example:

swing point1

This is reversed on the short side. In this case, you want to look for consecutive up days prior to the swing point high developing.

When you are looking for swing points to develop, you always want to look to the left of the chart to see if the stock is at a support or resistance area on the chart. That will improve the reliability of this entry strategy.

How to invest in a bear market?


bear-sell_0

Sticking to a buy-and-hold strategy (where you buy stock and hold onto it for better or worse) at the onset of a bear market is financial suicide. People have a tough time selling, and financial advisors have an even tougher time telling them to cut their losses. (Admitting failure is hard for some people to do.)

Understand that investing should be a logical, practical, and unemotional pursuit. In an emerging bear market, keep the following points in mind to maximize your gains (or just to minimize your losses):

  • Review your situation. Before you consider any move in or out of the market, review your overall financial situation to make sure that your money and financial condition are as secure as possible. Make sure that you have an emergency fund of three to six months’ worth of gross living expenses. Keep your debt at a comfortably low level. Review your career, insurance, and so on. Schedule a financial checkup with your financial planner.

  • Remember that cash is king. When the bear market is coming and economic storm clouds are rolling in, keep the bulk of your money in safe, interest-bearing vehicles such as bank investments, treasury securities, and/or money market funds. Doing so keeps your money safe. When stocks are falling by 10 to 20 percent or more, you’re better off earning a low-percentage interest in a secure, stable investment.

  • Stick to necessities. In an economic downturn, defensive stocks generally outperform the market. Defensive stocks are stocks of companies that sell goods and services that people need no matter how good or bad the economy is doing. Good examples are food and beverage, energy, utilities, and certain healthcare stocks.

  • Use trailing stops. Trailing stops is just the active use of stop loss orders on a given stock. In the case of a bear market, you set your stop losses close to the stock’s market price (“tighten the trail”).

    • Say, for example, that you once bought a stock for Php 50 per share and it’s now at Php 110. Presume that you usually kept a trailing stop at 10 percent below the current market price. If the bear market is becoming more evident to you, then change that 10 percent to 5 percent. Before, that trailing stop on the Php 110 stock was Php 99 (Php 110 less 10 percent, or Php 11), but now it’s at Php 104.50 (Php 110 less 5 percent, or Php 5.50)

How to earn from the stock market even during the bear market?


With the stock market in “red” territory nowadays, I would like to bring you back 8 years ago to a company that mostly love by Filipinos around the world. In this article I will show you how would your money grow if you started investing in the stock market by regularly investing even 5,000 pesos in a yearly basis with a single company.

As you have learn, there are two ways how you can earn from the stock market. You can earn through price appreciation and through dividends may it be in the form of cash or stocks. In this illustration I will show you what would be your money’s worth if you started investing 8 years ago, and the company that you are supposed to be investing was your favorite JFC or Jollibee Foods Corporation. Of course you know about this giant company listed in the Philippine stock market.

Below is a simple illustration.

JFC Gains

Regularly Investing

The data above shows an investor is investing a minimum Php 5,000.00 in a “yearly” basis from 2008 to 2015. With the investment the investor start to buy shares of JFC at first the number of shares bought are many and gradually decreases as the stock price increases (from 130 shares to just 20 shares). The investor will start to buy shares every January of each year. The total invested amount is Php 37,607.20.

Dividend Payments

Jollibee Foods Corporation gives a regular dividends to its share holders and the investor has benefited from it since 2008. It has given dividends 19 times in a 8 year span ranging from Php 0 .25 to Php 2.00 when totaled its value is Php 13.01. The total earned dividends received by the investor less than its commission of 10% is Php 4,451.85.

Commission Payments

In every transaction that you make in the stock market through a broker you will be charged with a commission may it be buying or selling stocks. With this I am using the computation of COL Financial for the commissions for every transactions it appeared in the above table in red fonts. Buying commission amount is Php 110.94 and Dividend commission amount is Php 494.65 total commission fee is Php 605.59.

Value Computations

By regularly investing Php 5,000.00 in JFC the moneys’ worth today is already Php 97,290.91 from a total of Investment cost of Php 37,607.20 only it has 206% growth rate. See computations below.

JFC Gains1

Price Appreciation

JFC price action

One way to earn in the stock market is the price appreciation of your favorite stocks. With the price action of JFC from 2008 to present it is not necessary to push the panic button to exit because in the long run the gains will still be accumulated base on its 8 year performance.

Happy Investing everyone.

P.S. I want to hear from you after reading this article please send your comments below. If you find this article worth sharing, share it now to your friends who still have doubts investing in the stock market. You may also subscribe on this blog on the subscription tab on the upper right part of this page.

How to Identify traders in a stock chart?


We have learned that there are different types of traders in the stock market. In this post we will identify them through the use of a stock chart. Below is an example of a stock chart of Universal Robina Corporation (URC).

traders

Position trader

This type of trader is looking to hold stocks for long periods of time. They buy stocks that are first breaking out of basing patterns into a stage two uptrend. This is likely where you will see institutions buying stocks. This buying pressure is what starts the uptrend. They are hoping that the next two groups of buyers will push the stock higher.
Momentum trader
This type of trader buys stocks that are, well, showing momentum! They buy stocks right after a major move in a stock and hold for a short period of time. They are hopping on a board a fast moving stock looking to capture short term gains quickly.

Swing trader

Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren’t interested in the fundamental or intrinsic value of stocks, but rather in their price trends and patterns. Swing traders uses the traders action zone, they look for reversals on this area.
On the sample chart above the the area in between the 10 SMA and 30 EMA is considered by swing traders to enter and buy the stock and this is also the swing traders action zone.
It doesn’t matter whether you use SMA’s or EMA’s. There is little difference between the two so don’t get caught up in the variations. We are just using these moving averages to create a zone that we will find our entries for long and short positions.

Overcoming “FEAR” of investing


I consider investing is the most important element of everyone’s financial future — but sometimes it takes a while before we really get it, so to speak.

Fortunately, I think it’s fair to say most of the readers here at Stock Market Beginners get it. But I’m willing to bet that there are still a few who might get the concept but have yet to put it into action.

As I read an article that defines F.E.A.R it says “False Expectations Appearing Real”, that is how I came to know that we live a life of choice. Everything we do everyday is a matter of our personal choices and nothing else.

Biggest success factor: Take the plunge

There are a lot of people who have the knowledge on investing and they even believe that it is good for them. But sad to say that they do not take the action to be an investor. I call them investing believers but do not have the desire to be investing doers.

A lot of reasons why these people does not transform themselves, and these come immediately into my mind:

  • They don’t think they have enough money.
  • They think of losing their money if they make mistake in investing.
  • They have fears about inflation or other extraneous factors they can’t control, and so forth.

Yes, those reasons above may sound valid, but no matter how valid the reasons sound, they still don’t remove the simple fact that, if you don’t invest now (and you continue not to invest), you will discover somewhere down the road that retirement is not an option for you.

From the time I started investing I’ve met people who invest and those who don’t, and I have discovered something that people who get to start investing in any form start at it. And the one’s who don’t, don’t.

Action reinforces action

The best way to start investing is simply to get started investing. By taking actions to what we have in mind (an investment, if we will), we begin to acquire an emotional attachment to it. From then we will begin to start sacrifices to keep that thing going, because the human mind is designed in such a way that once we devout ourselves to what we desire to achieve it will transform into a habit.

Just like those people who do not invest they will to continue to nod that investing is essential to their future financial health and continue on without investing. They commit themselves not to invest, because of the fear that they have in their mind about investing, and with that they take an opposite action, and it will be reinforce as they to continue to think of their  fear.

How do you break the inaction mindset?

In every self-help books that I have read, the key to success, therefore, is to simply break the bad habit/mindset and replace it with the healthier one. Easily said, you might say, but …

In the real world that we have, I’ve concluded that the biggest thing holding people back from getting started investing is very simple. They just don’t know where and how to get  started.

I know it held me back for 3 years from the time I learned how to invest into the stock market and the biggest thing which held me back though was, I didn’t know how to get a stock broker to start my stock market investment.

But how do we get to to break this inaction mindset was two things:

1. Knowledge

The more we learn about any subject, from exercise to investing, the less intimidating it becomes. More knowledge also adds mental ammunition to take the jump and stay on course, all the way to retirement. Also, the more knowledge we have, the more assurance we will feel that we’re not making obvious mistakes. There are many resources, free and paid, to learn more about investing.

2. Simply setting aside money

As the years gone by until the time I found my stock broker, I was setting aside a certain amount of my monthly income. First I do it manually through personally depositing it and later on I apply an automatic deduction of my payroll to my deposits. With that it won’t be a hassle anymore in part to personally deposit and it gives me more free time.

Making the decision to cut back is the hard part. Once you have done that, you get to the choice of where to put that money you set aside each month.

Play to your strengths

I believe there is no one-size-fits-all answer to investing, whether it be for retirement or any other future purpose. For instance, We consider these two type of investors, Mar and Jejomar. Mar worked an ordinary job his whole career, never making much more than an average income, and yet today he’s a millionaire. His strategy: investing in individual stocks with a conventional investing account.

Jejomar, on the other hand, has an auto repair shop, and has for many years. He knows nothing about index funds or anything traded anywhere. His wife works for a realtor, and so they began buying rental homes a decade or two ago. He’s a hands-on type of guy, used to fixing stuff and dealing with customers, so to him and his wife rental property was (and still is) a no-brainer investment. In every recession, they picked up a house on the cheap, and all their houses are cash flow positive today. They are saving now for the next recession, when they hope to pick up another bargain. Jejomar is still much younger than Mar, but it doesn’t take a rocket scientist to see that he will probably be in the same position as Mar when he reaches retirement.

The point is: Figure out who you are and what you’re comfortable with, and go with that. Mar just loves his job and career; and if he started with rental properties, it wouldn’t have taken him long to just say, “Oh, just forget it!” So, don’t listen to what others say you should invest in: Consider all the options and pick one or two investments that resonate with you.

Keep it simple at first

But whatever your investment interest is, start out with something simple. The two simplest options are:

  1. Sign up for a savings deposit account or similar plan at work, into which you put an amount you’re comfortable with every pay period. Automate that transaction, so it gets taken right out of your paycheck and you never see it.
  2. If you don’t have a job with regular pay, you can simply start your piggy bank and eventually deposit in a bank.

That is simple and easy.

Once you’ve stayed with the savings account or retirement plan for a year or so, you’ll discover that, while you weren’t looking, that switch in your mindset shifted from trying to justify not investing to trying to justify investing.

You are on your way to a secure financial future!

The important thing is not what you start with, but that you get started. The sooner you start, the more options you will have in your future when retirement beckons.

Future flexibility

One of the benefit of investing is that it will not leave us being locked in. The return of it can have you more options to diversify your investment allocations. It may be to open a new business, to buy more company shares, and any other investments that can grow your money. Also with great wealth it is more flexible to help other people in need especially your love ones and friends. That is the beauty of accumulating wealth at an earlier stage in life.

But you’ll never have that flexibility if you have nothing invested.

There is no way you will enjoy retirement or financial freedom later in your life if you don’t invest. If you have been holding yourself back by not knowing where to start, be held back no more.

P.S. Have you had to overcome the fear of investing? What advice would you give to someone that is trying to overcome their fear? Please share on the comment below.

EDC Stock Chart Analysis


One of the company that I have been following is EDC or Energy Development Corporation. And in this post I wanna share my own Technical Analysis (TA). I used in my TA the following tools:

  • Stock Chart by COL Financial
  • Candle Stick graph
  • Fibonacci Retracements
  • 10 SMA
  • 30 EMA
  • 200 SMA
  • Volume
  • Moving Average Convergence & Divergence
  • Relative Strength Index

If you haven’t still memorize how those above tools functions, you may check back on these related topics:

So let’s begin, below is the stock chart of EDC from January 2014 to present.
EDC1

Fibonacci Retracements

As you can notice I started to plot my Fibonacci Retracements on somewhere in April 2014. My reason for this is very simple, it is in this period that the 10 SMA and 30 EMA stayed above the 200 SMA and also the start of the “Bull Run” for this stock. Also if you are that observant, you will notice that most significant movements occurred in the Fibonacci Retracements lines. And the latest movement in the right most part of the chart is the stock price is retracing to the 50% retacement line for the 3rd time thus testing its Support Level.

Short Term Consolidation

The first time it reaches the 50% it bounced back and reached the 38.2% retracement line and for the 2nd time it falls back to 50% and then it moves back to 38.2% and then again back to 50%. Thus I labelled it as short term consolidation, the sellers and buyers has yet to decide on what trend they will go will it be Uptrend or continue its Downtrend?

Market Interest

Interest of a certain stock can be measured through its Volume, the higher the volume means the higher the interest and the lower the volume the lesser the interest of the market participants on a particular stock. In this case with EDC volume has been decreasing since it started its downtrend on May 2014. And for me this is the best way to accumulate more shares since it has been neglected by the market that is why I put a check mark on its volume chart.

Moving Average Convergence & Divergence

As indicated in the MACD graph, it is already near the Zero (0) line. Most traders are looking into this indicator since a break on the zero area will trigger them to buy EDC shares since it will indicate an upward trend. But as of this time an attempt to pass above zero has been stopped for a while thus I’m putting an exclamation mark on this indicator to excite myself. LOL

Over Selling

Relative Strength Index (RSI) indicator for EDC indicates that its shares has been oversold since it is already at around 30. This means that EDC shares are undervalued and I consider it with a check mark to indicate that buying some shares is already on a GO.

Conclusion:

Therefore I conclude that base on my own technical analysis, EDC must not to go down from its Fibonacci Retracement of 50% to 61.8% in order not to break its support level @  around Php 7.11. For it to move upward, it needs to break it support level at 38.2% retracement line or @ around Php 7.7 on its stock price.

P.S. This technical analysis is for personal purposes only and does not authorized anyone to follow all that has been discussed in this post. Personal research of each stock still best recommended in choosing your favorite company to invest or trade.